Chula Vista to pay $8M in class-action lawsuit

Chula Vista  A San Diego Superior Court judge has approved a preliminary settlement in a class-action lawsuit that challenged Chula Vista’s tax on wireless phone service, and tens of thousands of cellphone users in the city could share in the $8 million to be distributed as part of the agreement.

The three-year-old lawsuit challenged a 5 percent fee the city collected from phone customers under the city’s 1970 telephone communication services law. The suit said the tax was not meant to apply to wireless phone service. The settlement was reached last month.

Under terms of the agreement, Chula Vista wireless phone users who paid the tax between April 2010 and April 2013 should be eligible for a rebate ranging from $35 to hundreds of dollars.

“By our estimates (the $8 million) should be more than enough to cover all the possible refunds,” said Jeremy Robinson, an attorney for the San Diego law firm of CaseyGerry, which filed the suit along with Capretz and Associates in Newport Beach. It was filed on behalf of two Chula Vista residents and later certified as a class-action case.

The city disagrees with the lawsuit’s claim that certain aspects of the tax are unlawful, saying the issues are complex. However, city officials thought continued litigation would be expensive and it was in the best interest of citizens to settle the case, said Anne Steinberger, Chula Vista marketing and communications manager.

A 90-day claim period began when notices were sent out earlier this week.

In March 2012 Superior Court Judge Richard E.L. Strauss ruled against the city’s effort to dismiss the lawsuit saying state law, which allows class-action lawsuits for tax refunds, trumps local statute.

In November 2010, the city attempted to update the language of its utility laws through Proposition H, which would have applied the tax to newer forms of communication such as Skype and teleconferencing apps. Voters defeated the proposal.

Once the court has officially approved the settlement, the telephone tax rate will be reduced to 4.75 percent from 5 percent.

“As a part of this settlement the city is going to revise the way the tax is worded,” Robinson said.

A hearing is scheduled for Sept. 20, following the end of the refund-claim period, at which time Robinson hopes the judge will officially approve the settlement.

Forms are available online at ChulaVistaCellPhoneTaxSettlement.com or call (888) 270-0735. Claims must be filed no later than July 31, 2013.